Evita Corporation prepares its statement of cash flows using the indirect method. Evita's statement showed "Net cash provided by (used in) operating activities" of $46,000. Under the direct method, this number would have been:
A) $0.
B) $46,000.
C) greater than $46,000.
D) less than $46,000 but greater than $0.

Question

Quizplus · Accepted Answer

Under the direct method, the "Net cash provided by (used in) operating activities" would be the same as the cash received from customers minus cash paid for operating expenses, which is equivalent to the net income reported on the income statement. Therefore, the answer is B, as the net income is the same whether using the indirect method or the direct method.

Evita Corporation Prepares Its Statement of Cash Flows Using the Indirect